Hope on Horizon for Home-Supply Crunch: Builder Borrowing Picks Up

A new FDIC study shows that bank lending for land development and construction is on the rise after slumping to a 14-year low early last year. The trend suggests that the supply crunch for new homes could loosen up in the next several months. According to the data, the outstanding balance on loans for land acquisition, development, and construction increased in the last three months of 2013 to $209.9 billion versus $206 billion in the third quarter. Economists contend that if the overall balance is growing, it means that originations of new loans are likely rising even faster. They forecast that an increase in lending would spur additional home construction and possibly put downward pressure on residential prices. In 2013, the average price of a new U.S. home climbed 10.2 percent to $322,100 — the highest annual figure since the Census Bureau started tracking such prices in 1963. | Read More